In Prince Edward Island, cohabitation agreements are legally valid and enforceable contracts that allow unmarried couples to define their rights and responsibilities during their relationship and in the event of separation. This is particularly important in PEI, as common-law partners do not have automatic rights to property division under provincial family law statutes.

This article explores the legal framework governing cohabitation agreements in PEI, how to ensure they are enforceable, and what makes them especially important for couples who are not legally married.

Are Cohabitation Agreements Permitted in Prince Edward Island?

Yes. Cohabitation agreements are expressly permitted in PEI under the Family Law Act, RSPEI 1988, c F-2.1. Although this statute is primarily directed at married spouses, it also recognizes the legal validity of domestic contracts, which include cohabitation agreements.

Section 52(1) of the Family Law Act states:

“Two persons who are cohabiting or intend to cohabit and who are not married to each other may enter into an agreement in which they agree on their respective rights and obligations during cohabitation, or on ceasing to cohabit or on death, including

(a) ownership in or division of property;

(b) support obligations;

(c) the right to direct the education and moral training of their children, but not the right

to parenting time, decision-making responsibility, or contact with their children;

(c.1) the payment of the expenses of a child’s prenatal care and birth;

(c.2) funeral expenses of the child or mother; and

(d) any other matter in the settlement of their affairs.”

This language makes it clear that cohabitation agreements are authorized by statute and may deal with a broad range of issues relevant to the relationship.

Who Qualifies as a Common-Law Partner in PEI?

PEI law does not use a uniform definition of “common-law partner” across all legal contexts. However, for purposes of cohabitation agreements:

• There is no minimum period of cohabitation required to enter into a valid agreement.
• Couples can sign a cohabitation agreement before they move in together, or at any point during their relationship.
• Legal rights under family property law do not arise automatically for common-law partners in PEI, even after years of cohabitation.

This means that a cohabitation agreement is essential for couples who wish to define their own property, support, and financial obligations, since the law provides little by default for unmarried spouses.

What Can a Cohabitation Agreement Cover in PEI?

A cohabitation agreement in Prince Edward Island may include terms about:

• Ownership and division of property, including property acquired during the relationship
• Rights to specific assets, such as homes, pensions, investments, or vehicles
• Responsibility for debts or liabilities
• Spousal support: entitlement, amount, duration, or a waiver
• Financial roles during cohabitation (e.g., sharing household expenses or investing in joint property)
• Exclusive possession of the home in the event of separation
• Gifts, loans, or other financial arrangements between the parties
• Obligations on death, such as continuing support or property division (although these should be supported by a will)

As in all Canadian provinces and territories, cohabitation agreements cannot override a child’s right to support, and cannot predetermine parenting arrangements such as custody or parenting time. These matters must be resolved based on the best interests of the child.

What Makes a Cohabitation Agreement Enforceable in PEI?

Prince Edward Island’s Family Law Act sets out clear formal requirements for enforceability. These are largely aligned with other Canadian provinces, but must be carefully followed.

1. Formal Requirements – Section 54(1) of the Family Law Act provides as follows:

“A domestic contract and an agreement to amend or rescind a domestic contract are unenforceable unless made in writing, signed by the parties and witnessed.”

Accordingly, a cohabitation agreement must be:

• In writing
• Signed by both parties
• Signed in the presence of at least one witness, who also signs

Failure to meet these requirements may result in the agreement being unenforceable.

2. Voluntariness and Informed Consent

The agreement must be entered into freely and voluntarily. Courts will consider whether there was:

• Duress or undue influence
• A significant imbalance in bargaining power
• Pressure to sign without time for review or advice
• Lack of understanding of the agreement’s consequences

If any of these concerns are present, the court may refuse to enforce the agreement or may sever specific unfair provisions.

3. Full and Frank Financial Disclosure

Although PEI’s Family Law Act does not explicitly require financial disclosure, courts across Canada, including in PEI, have held that fair negotiation of domestic contracts requires full financial disclosure.

Failure to disclose key assets, income, or liabilities at the time the agreement was signed may lead to it being set aside, particularly if it resulted in an unfair or one-sided outcome.

4. Independent Legal Advice (Recommended, Not Mandatory)

The Family Law Act does not require independent legal advice (ILA) for the agreement to be valid. However, courts may view the absence of ILA as a factor in determining whether the agreement was fairly entered into.

To strengthen enforceability, it is recommended that:

• Each party receive independent legal advice
• Certificates of legal advice be attached to the agreement
• Each lawyer confirm that their client understood the agreement and its consequences

5. Fairness and Public Policy

Courts retain discretion to set aside or vary cohabitation agreements where they are:

• Unconscionable
• Contrary to public policy
• Grossly one-sided or would cause severe hardship to one party at the time of enforcement

However, courts generally uphold the parties’ right to make their own agreements—provided the process was fair and the agreement was properly executed.

Can a Cohabitation Agreement Waive Spousal Support?

Yes. A cohabitation agreement may include a clause that:

• Waives spousal support entirely
• Limits support to a fixed amount or duration
• Defines specific circumstances under which support will or will not be payable

Such waivers are generally respected, but a court may still override them if:

• There was no meaningful disclosure or legal advice
• The party seeking to enforce the waiver is facing serious financial hardship
• The waiver would be unjust or contrary to public policy

Can a Cohabitation Agreement Address Inheritance Rights?

Yes, but with limitations.

In PEI, common-law partners do not automatically inherit from each other if one partner dies intestate (without a will). The Probate Act and Intestate Succession Act generally apply only to legally married spouses.

A cohabitation agreement can:

• Waive or limit the right to claim against the deceased’s estate
• Include promises to make a will or maintain life insurance
• Set out obligations to financially support the surviving partner upon death

However, such provisions should always be supported by a will and proper estate planning. A cohabitation agreement is not a substitute for testamentary documents and may not be enforceable in isolation if challenged by family members or other heirs.

Does the Agreement Remain Valid if the Parties Marry?

Yes. Section 52(2) of the Family Law Act states:

“If the parties to a cohabitation agreement marry each other, the agreement shall be deemed to be a marriage contract.”

Unique Considerations in PEI

The Family Law Act property division rules apply only to legally married spouses. This means that, in the absence of a cohabitation agreement, a common-law partner in PEI:

• Has no statutory right to share in property acquired during the relationship
• Cannot claim the matrimonial home or household contents
• May have to rely on difficult and uncertain claims like unjust enrichment or constructive trust

Best Practices for Drafting a Cohabitation Agreement in PEI

• Ensure the agreement is in writing, signed, and witnessed
• Exchange full written financial disclosure beforehand
• Include clear clauses dealing with:
  • Property ownership and division
  • Spousal support (waiver, entitlement, or amount)
  • Household expenses and liabilities
  • Obligations on separation or death
• Encourage each party to obtain independent legal advice
• Coordinate the agreement with a will and estate plan
• Include certificates of legal advice as an appendix if ILA is obtained

Conclusion

Cohabitation agreements in Prince Edward Island are a legally recognized and valuable way for unmarried couples to protect their interests and define their rights. In a province where common-law partners receive no automatic property rights and limited protections on separation or death, these agreements offer clarity and enforceability.

By following the requirements of PEI’s Family Law Act and applying sound legal and drafting principles, couples can create agreements that are fair, valid, and likely to be upheld by the courts. Whether you are beginning a life together or already living with a partner, a well-drafted cohabitation agreement can provide long-term peace of mind.

You’re Invited to Call or E-Mail!

If you’re considering a cohabitation agreement — or have already made your decision — you’re invited to call or email us. We’ll explain for free how you can protect your assets and plan your estate. You can call us toll-free at (800) 407-2570 or email us using our contact form here. We can help you anywhere in Ontario, including Ottawa, Toronto, Mississauga, Brampton, and Hamilton.